What is commercial auto insurance?
Commercial auto insurance is a crucial protection for businesses that rely on vehicles to carry out their operations. It provides coverage not only for the vehicles themselves but also for the liabilities that can arise from accidents or incidents involving these vehicles while they are being used for business purposes. Whether a company uses cars, trucks, vans, or other types of vehicles, commercial auto insurance offers the necessary financial security and peace of mind.
The coverage provided by commercial auto insurance extends beyond physical damage and repairs to vehicles. It typically includes liability coverage, which protects the business from financial losses resulting from bodily injury or property damage caused by the company’s vehicles. This is especially important in cases where accidents can lead to significant medical expenses, legal fees, or property repair costs.
Moreover, commercial auto insurance can also cover theft, vandalism, medical payments for injuries sustained in accidents, and uninsured or underinsured motorist coverage. These additional protections further fortify businesses against unforeseen circumstances and potential financial hardships.
Selecting the right commercial vehicle insurance policy requires careful consideration of the business’s unique needs and risk factors. With our expertise in commercial insurance, working with our team at BrokerLink can be invaluable in guiding you through the process of selecting the appropriate coverage levels and policy features.
Commercial auto insurance coverage types
The scope of coverage offered by commercial auto insurance policies may differ depending on the business’s location and specific needs. One critical aspect is that all commercial auto insurance policies must comply with provincial laws, much like personal car insurance. Each Canadian province has its own set of regulations governing auto insurance, which includes specific mandatory coverage types.
For instance, in Ontario, all commercial auto insurance policies are required to encompass four essential coverage types: third-party liability coverage, direct compensation-property damage coverage, accident benefits coverage, and uninsured automobile coverage.
Furthermore, businesses must consider additional factors such as coverage for attached equipment or vehicle modifications, as well as commercial trailer coverage. Apart from these mandatory coverage options, businesses have the flexibility to opt for supplementary coverage to further protect their fleet of vehicles, such as collision or comprehensive coverage. Below, you can find more detailed information on each type of commercial auto insurance coverage:
Third-party liability coverage
This coverage provides crucial protection for your business in the event that one of your employees is involved in a car accident resulting in injuries to another individual or damage to their property. With this part of your policy, your insurance provider assumes responsibility for compensating the affected third party on your behalf. This compensation includes coverage for medical expenses related to bodily injuries or repairs to the damaged vehicle, along with any associated legal or court fees, up to the policy’s coverage limit.
In Canada, while the amount varies by province, all commercial car insurance policies are required to include third-party liability car insurance. However, it is strongly recommended to carry a minimum of $2,000,000 in third-party liability coverage to ensure ample protection for your business in the face of potential accidents and their associated liabilities.
Accident benefits coverage
Accident benefits coverage is a crucial component of commercial auto insurance. This coverage ensures that if you, a passenger, or a pedestrian, require medical attention after a collision, financial support is available. Regardless of fault in the accident, accident benefits coverage can assist in covering expenses like loss of income, medical costs, and other related expenditures.
Direct compensation-property damage coverage
This coverage serves to protect a commercial vehicle and its contents from the financial burden of property damage. This coverage comes into effect only when the driver is not at fault for the collision that led to the damage. The name “direct compensation” is derived from the fact that the insurer directly provides payment for the caused damage, facilitating repairs or replacement of the affected vehicle.
In Ontario, to qualify for compensation under the direct compensation portion of your commercial car insurance policy, the incident must meet specific criteria: it must have occurred in Ontario, involved multiple vehicles, and at least one of the vehicles involved must participate in the province’s car insurance program. In such cases, this coverage ensures that your business is protected from property damage expenses caused by accidents where you were not at fault.
Uninsured motorist coverage
Uninsured motorist coverage provides essential protection for you and any passengers in your business vehicle in the event of an accident caused by an at-fault driver who lacks sufficient insurance coverage or has no insurance at all. This coverage also extends its safeguard to shield company cars from hit-and-run incidents. In such unfortunate circumstances, uninsured motorist coverage comes to the rescue, covering a range of expenses, including medical costs for injuries, car repair expenses due to damages, compensation for lost wages, and other related expenses.
Accident forgiveness coverage
Accident forgiveness is a popular optional insurance coverage option among Canadian drivers. By adding it as an endorsement to your auto insurance plan, you can safeguard your driving record and proactively shield yourself against potential premium hikes following an at-fault accident claim. However, it’s important to note that the specifics of this coverage may differ depending on the province your business is in.
Collision coverage is an elective feature of your commercial car insurance that provides protection in the event that one of your insured employees is involved in an accident with another vehicle or an object on the road, regardless of who is at fault. If such a collision occurs, the collision coverage section of your policy comes into play, enabling your business to receive compensation to cover property damage resulting from the accident, such as car repairs. This optional coverage offers valuable financial support and peace of mind when accidents occur, ensuring your business can handle the expenses related to vehicle damage.
Comprehensive coverage is an additional, optional form of commercial vehicle insurance that provides extensive protection for your business vehicles beyond what is typically covered by standard car insurance. Opting for comprehensive coverage safeguards your vehicles against various risks, including theft, vandalism, fire, water damage, and damage caused by falling objects. By choosing comprehensive coverage, your business gains an extra layer of security against various perils that a basic insurance policy may not cover.
Modifications and attached equipment
Many commercial vehicles come with additional equipment or modifications, such as winches, fuel tanks, and toolboxes. It is vital to inform your insurance company about these changes and ensure they are included in your policy. Neglecting to disclose such modifications may lead to inadequate compensation in the event of a claim. In some cases, non-disclosure of material changes to the vehicle could even result in claim denial. To avoid potential coverage gaps and claim-related issues, it is crucial to be transparent about any modifications made to your commercial vehicle when discussing insurance with your provider.
Commercial trailer coverage
Commercial trailer coverage provides insurance protection specifically designed for trailers used in business activities. This coverage includes both physical damage protection for the trailer itself and liability coverage in the event the trailer causes harm or damage to others. For trailers that you do not own but use for your business, you can add them to your policy as “non-owned trailers” to ensure you have sufficient liability coverage for those trailers as well. Having commercial trailer coverage in your policy ensures comprehensive protection for your business regarding trailer usage, safeguarding you from potential financial losses and liabilities.
Commercial fleet coverage
Commercial fleet insurance is a type of insurance coverage designed to protect a fleet of vehicles used for business purposes. It is a comprehensive policy that provides insurance for multiple vehicles under a single plan, offering convenience and cost savings for businesses that operate a fleet of cars, trucks, vans, or other commercial vehicles. This type of insurance has its own set of fleet insurance requirements and is suitable for businesses that rely on a fleet of vehicles to conduct their daily operations, such as delivery companies, transportation services, construction firms, and other industries that use multiple vehicles as part of their business activities. Read our blog to learn more about properly protecting your commercial vehicle fleet.
Who needs a commercial auto insurance policy?
Businesses of all sizes and industries can benefit from commercial auto insurance. Whether you run a small family-owned business with a single delivery van or manage a large corporation with a fleet of hundreds of vehicles, this insurance is designed to meet your specific needs. For startups and small businesses, a single commercial vehicle is often sufficient to get the job done. In such cases, an individual commercial auto insurance policy is appropriate.
In contrast, established companies or those with multiple vehicles might find it more practical to consolidate their insurance needs. Fleet insurance comes into play when a business owns a group of vehicles that must be insured under one policy. Fleet insurance streamlines the process, reduces paperwork, and often leads to cost savings compared to insuring each vehicle separately. This is particularly advantageous for businesses with multiple drivers and vehicles, as it simplifies the management of insurance coverage.
There are numerous advantages to commercial auto insurance, similar to those offered by personal insurance policies. It ensures comprehensive coverage for drivers, passengers, and vehicles, safeguarding business owners from potential financial setbacks arising from unforeseen incidents. As a result, this insurance type is well-suited for a diverse array of businesses, ranging from delivery companies and warehouses to retail stores and food trucks.
Contrary to the belief that commercial auto insurance is only for the transport industry, businesses heavily reliant on vehicles for their operations, excluding daily commutes, can immensely benefit from this coverage.
Therefore, no matter what industry your business is in, if it heavily relies on your vehicle to perform essential tasks, we strongly advise consulting with an insurance broker about obtaining a commercial auto policy or renewing your car insurance policy. Such a policy ensures you and your business are protected from potential financial losses stemming from accidents or any other incidents involving your vehicle.
How much does commercial car insurance cost?
Commercial auto insurance premiums can vary significantly from one business to another, and understanding the factors that insurance companies use to determine these costs is essential for Canadian business owners. The price of commercial auto insurance is influenced by a combination of factors related to the business itself and the vehicles used for its operations:
The industry your business operates in
Firstly, the industry in which the business operates plays a crucial role. Different industries may present varying levels of risk for insurance companies, and as a result, premiums can differ accordingly. For example, businesses involved in transporting hazardous materials might face higher premiums due to the increased potential for accidents and damage.
Your business procedures
The specific procedures and practices of the business also impact insurance costs. Companies with robust safety protocols and employee training programs may be viewed more favourably by insurers and, in turn, receive more competitive premiums.
The location your business operates in
Location is another significant factor. Insurance companies consider where the business operates and where the vehicles are typically parked or stored. Urban areas with higher traffic and crime rates may result in higher premiums than rural or low-risk locations.
The driving records of your employees and drivers
The driving records and experience of the employees or drivers are crucial considerations. A history of accidents or traffic violations may lead to higher premiums, while a clean driving record can help reduce insurance costs.
Employee demographics, such as age and gender, can influence insurance rates. Younger and less experienced drivers might be perceived as higher risk, leading to increased premiums.
The business’s annual mileage
The annual mileage of each business vehicle is a key factor. Vehicles that cover more miles have a higher exposure to accidents, resulting in potentially higher premiums.
The make and model of the company vehicles
Additionally, insurance companies consider the year, make, model, and value of each vehicle used by the business. More expensive or higher-performance vehicles may require higher coverage and, thus, higher premiums.
Insurance claims history
The business’s past insurance claims history is a significant consideration. Frequent or large claims in the past can result in higher premiums.
Types and value of transported goods
For businesses involved in transporting goods, the type and value of the goods being transported can influence insurance costs. High-value or sensitive cargo may necessitate additional coverage.
Percentage of travel to the U.S.
The percentage of travel to the U.S. is a factor for businesses with cross-border operations. Insurers consider the increased risks associated with international travel, which can impact premiums.
Coverage limits, types, and deductibles
Finally, the coverage limits, types, and deductibles chosen by the business also play a role in determining the overall premium. Higher coverage limits and lower deductibles typically lead to higher premiums.
Tips for saving money on commercial auto insurance
Commercial auto insurance is an essential aspect of protecting your business assets and operations, but it can indeed be a significant expense. However, there are several effective ways to make this insurance more affordable without compromising on essential coverage. BrokerLink’s team of expert advisors has gathered a comprehensive list of practical tips to help businesses in Canada save money on their commercial vehicle insurance policies:
Implement a driver risk management program and safety measures
Incorporating driver risk management practices into your business operations can lead to cost savings on your commercial auto insurance. For instance, by implementing a comprehensive risk management program, which involves hiring well-screened and trained drivers, establishing clear and detailed policies and procedures, maintaining proper documentation for preventative maintenance, and ensuring all company vehicles comply with motor vehicle regulations, you can potentially reduce your insurance premiums.
Bundle your insurance policies for a multi-car insurance policy
A multi-car insurance policy for commercial vehicles is a type of insurance plan that covers multiple vehicles used for business purposes under a single commercial auto policy. It offers businesses the convenience of managing and insuring several vehicles together, typically resulting in cost savings and administrative efficiency. Rather than having separate insurance policies for each commercial vehicle, a multi-car insurance policy streamlines the process by consolidating coverage for the entire fleet under one comprehensive policy. This type of insurance is well-suited for businesses that operate multiple vehicles, such as delivery companies, transportation services, construction firms, or any business that relies on a fleet of cars, vans, trucks, or other commercial vehicles to conduct daily operations.
Purchase hybrid or electric vehicles (EVs) as company cars
Lowering insurance premiums by using hybrids or electric vehicles (EVs) for your commercial fleet is a viable strategy that many businesses are adopting. Insurers often consider the safety and environmental features of vehicles when calculating premiums, and hybrids or EVs generally offer several advantages that can contribute to reduced insurance costs. Hybrids and EVs have advanced safety features, such as collision avoidance systems, lane departure warnings, and automatic emergency braking. These safety technologies can significantly reduce the risk of accidents and make these vehicles less expensive to insure. Some provinces offer incentives for businesses that switch to environmentally friendly vehicles. Taking advantage of these incentives can result in overall cost savings, including on insurance premiums.
Use telematics devices in company vehicles
By integrating telematics devices into your company vehicles, you can unlock potential insurance discounts and benefits. Telematics technology allows insurers to monitor driving behaviour and collect data on various factors such as speed, acceleration, braking, and distance travelled. This data helps insurers assess the risk associated with each vehicle and driver, allowing them to offer personalized insurance rates based on individual driving habits. Plus, when you adopt telematics devices in your company vehicles, you demonstrate a commitment to safe driving practices and risk management. Insurers often reward businesses that utilize telematics by providing discounts or reduced premiums for maintaining safe driving habits.
Install winter tires on commercial vehicles
Consider equipping your business vehicles with winter tires for a winter tire discount. In Canada, winter driving conditions can be challenging, but taking the proactive step of installing winter tires on your commercial vehicles could result in insurance cost reductions. Insurance companies may reward this safety-conscious choice by offering a lowered premium. Winter tires are known for providing better traction, enhancing road safety, and reducing the likelihood of accidents. By opting for winter tires, you demonstrate a commitment to road safety, which insurers recognize and may reflect in more favourable insurance rates.
Partner with a BrokerLink insurance broker
Collaborating with a BrokerLink insurance broker can be a strategic and effective way to save on commercial insurance premiums. Our experienced advisors possess in-depth knowledge of the insurance market and have access to multiple top insurance providers throughout the country. Our insurance brokers will assist you and your business in finding the most competitive rates and coverage options tailored to your specific needs. If you need commercial auto insurance or have any questions about how to insure your business vehicles, contact a BrokerLink insurance broker today.
Here at BrokerLink, we are a comprehensive insurance brokerage that aims to deliver outstanding services to every one of our customers. Our dedicated team ensures that shopping for insurance becomes effortless and hassle-free for you. With our experienced insurance brokers all throughout Canada, you can trust us to handle the task of comparing costs and securing the best coverage at competitive rates. We prioritize offering unbiased and informed advice, empowering you to make confident decisions about your insurance requirements. Your satisfaction and peace of mind are at the core of our commitment to exceptional service.
Contact BrokerLink for your free commercial car insurance quote
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